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Chapter 6

Determining the Purpose of Wealth and Setting High-Level Financial Goals

Clear financial goals and good investment plans are critical to successful wealth management. A solid, well-thought-out investment process will contribute immeasurably to the management of a wealthy family’s financial affairs and the simultaneous accomplishment of nonfinancial goals as well.

Clarifying family goals helps to determine clear priorities and a way forward. It also helps make choices and allocate priorities to specific decisions. A clear sense of goals also helps families stay on track and not be blown off course by the vagaries of the economy, markets, and family issues.

Family investments are usually required to serve a multiplicity of purposes such as providing cash for short-term distributions, preserving wealth in lower-risk growth instruments, taking some higher-risk investments to pursue capital growth for the next generation, funding a charitable program, and setting aside the financial assets necessary to respond to unforeseen contingencies and family emergencies.

For most wealthy families, objectives may vary across different portfolios or across different parts of a single investment portfolio. However it is constituted, the following questions need to be asked and answered:

What does the family want to accomplish?

What is the relative priority of their various goals?

Is the priority on capital preservation, capital growth, income generation, or some form of balanced return? ...

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